Replete with natural resources, Australia is a critical player in global energy markets. While the global economic climate roils with trade tensions between China and the United States, and commodity prices are volatile, Australia’s oil and gas industry is showing sustained and increasing confidence, especially through gas exports to the large powerhouse nations of Asia.
The oil and gas sector is one of the principal sources of revenue underpinning Australia’s economy, generating more than $31.7 billion in gross value add and directly employing approximately 20,900 full-time workers.
The most recent Resources and Energy Quarterly Update (December 2018) from the Federal Government’s Office of the Chief Economist, saw an upward revision of forecast commodity export earnings beyond $264 billion, “meaning that resource and energy commodities now represent more than half of Australia’s total export value”. These export volumes have been driven in large part by “surging LNG and crude oil exports … in the December quarter”. The update also notes that prospective resource investment is starting to recover again after a sharp fall due to the completion of the giant LNG projects.
Showing an equally positive sentiment, the 2018 National Energy Resources Australia (NERA) Sector Competitiveness Plan Update noted that: “In 2018, Australia’s energy resources sector has switched course towards value creation, growth and building trust. As  speeds up, the convergence of technologies and business models is disrupting the national economy and energy resources sector supply chains.”
But it’s not just peak bodies and policymakers seeing an upswing in sentiment. The 2019 Industry Confidence Survey for the Australasian Oil & Gas Exhibition & Conference (AOG) reported strong buoyancy within the sector, with the growth of market activity behind significant current and future projects underpinning that sentiment.
The 2019 AOG Survey is the second such annual survey conducted by the AOG. Undertaken in January, it captures the views of industry leaders on the current health of the oil and gas sector, priorities across all areas of the sector, future challenges and changes, and the shifting energy mix.
A wide range of industry specialists completed the AOG Survey, with almost 700 representatives from senior and operational management participating, as well as engineers, consultants, contractors and business development managers from a range of business sizes and types. There was also a strong response from government.
The AOG Survey uncovered confidence in a number of key areas: that new large projects would drive growth; that technology advancements are beginning to have a big impact on the sector’s efficiency and profitability; that demand for gas would be a key driver of growth; that based on the demand outlook and recovering oil price, there is increased investment and confidence in the sector; that there is increasing demand for clean energy; and that exploration is picking up again, leading to more production and upside.
While respondents maintained a positive outlook overall, they did nominate a number of potential headwinds, including: the costs in Australia of developing new upstream projects coupled with the modernisation of offshore plants requiring fewer skilled operators; domestic and international political and economic uncertainty; the transition to renewables disrupting the current energy market; and lingering pessimism within the market.